Gas pricing defies logic

February 09, 2003 11:00 pm

A difference of 12 cents a gallon for fuel separates two gas stations next door to each other in Crescent City. Just a half-hour north in Oregon, gas prices are as much as 31 cents a gallon lower than the lowest California prices. (Stephen M. Corley/The Daily Triplicate).

By Jennifer Henion

Triplicate staff writer

Gas prices are closing on $2 per gallon again in Crescent City while prices seem to be dropping in Brookings.

As of yesterday morning, the cheapest grade of unleaded gas sold for as much as $1.90 per gallon in Crescent City and as little as $1.46 per gallon in Brookings just 25 miles north.

Del Norte County Supervisor Chuck Blackburn who has studied the gasoline markets and an in-depth report on gasoline pricing by the state Attorney General's Office, said the reason for the price difference is simple:

"Gouging. Someone is making a ton of money in California. It bothers me that we're getting ripped totally," Blackburn said.

Neither Blackburn nor the research material of the state's gas market blame individual distributors such as Joe Duncan, owner of Joe's Chevron in Crescent City for 41 years.

Instead, the Attorney General's report shows there are six gas producers making 90 percent of California's gas supply Those six companies are using contracts to dictate the wholesale prices passed on to the distributors.

To make ends meet, the distributors have to charge what they can above that wholesale price.

For individuals like Duncan, that means jacking up the price to $1.90 when his neighbor station, Gas 4 Less, can charge $1.77.

"I have to pay rent on it. When not many people are buying gas, I have to pay rent on the storage. It's supply and demand," Duncan said.

In taking his case to the Attorney General's Office, state Senator Wes Chesbro and Congressman Mike Thompson, Blackburn is hoping the reins can be pulled in on California's major gas suppliers.

He pointed out that the same wholesale distributor owns 75 percent of the gas stations in both Del Norte and Humboldt Counties.

With prices so much higher in Del Norte than in Brookings and other Oregon cities, Blackburn said the huge corporations are taking advantage of the demand here unfairly, compromising local businesses.

"If people see cheaper prices somewhere else, they're going to go there, that's my biggest concern. People are going to save $8 a tank going 25 miles up the coast. People aren't going to stop here for gas and visit the neighboring shops if they can get it cheaper up there," he said.

The Attorney General's report shows the only extra cost to California refiners is the five-cent cost per gallon of the additive MTBE and another two cents for excise tax.

With a margin of profit figured in, Blackburn said his calculations show an extra 36 cents above Oregon and Texas prices unaccounted for.

When asked his opinion of the effects of impending war with Iraq on gas prices, Blackburn said it's not an excuse yet.

"If the price isn't changing per drum of oil, but the price is going up at the pump, something's not right.

"Sure, the threat of war is creating an impact, but this is ridiculous. Saudi Arabia said they will up their production if need be and Venezuela is producing product again," he said.